Controversy over Connecticut's borrowing levels and how to fund COVID-19 measures surrounded a two-year, $4.7 billion bond authorization bill that Gov. Ned Lamont signed Friday.
The measure includes $5 million for measures to combat the virus, with leaders from the minority Republicans saying the state should tap its rainy day fund instead of borrowing.
The bill passed the House of Representatives and Senate by bipartisan 126-20 and 31-5 margins, respectively, shortly before the capitol in Hartford shut down
Lamont has signed several related executive orders including a public health emergency, which enables him to enforce quarantines. As of Sunday night, 26 state residents have tested positive for COVID-19, the governor said.
His order on Sunday canceled classes at all public schools statewide effective Tuesday through at least March 31, and provides flexibility for municipal budget deadlines and related matters.
The bond bill, which stalled amid debate over still-gridocked highway tolling, includes $166 million in long-delayed spending on municipal aid. Related borrowing will include $60 million for the Town Aid Road grant; $30 million for the Local Capital Improvement Program and a $76 million omnibus grant for municipal projects.
"This bond package makes smart investments, all while holding the line on borrowing and maintaining our commitment to being fiscally responsible," Lamont said.
Republican leaders, though, accused Lamont of blowing a state "debt diet" he trumpeted a year ago in pitches across the country to investors and to bond rating agencies. Lamont said at the time that he would limit borrowing to roughly $1 billion per year.
S&P Global Ratings and Kroll Bond Rating Agency in 2019 raised their outlooks to positive and stable, respectively, marking the first positive action on Connecticut's general obligation bonds in 18 years.
Connecticut still has low ratings for a state government: A from S&P, AA-minus from Kroll, A1 from Moody’s Investors Service and A-plus from Fitch Ratings.
"He said he sold to Moody's that we're going to have authorizations that are lower, bonding that is lower," Senate Republican leader Len Fasano, R-North Haven, said of Lamont. "Our credit rating went up because of these arguments. He has broken a promise."
According to Fasano, top lawmakers prefer tapping rainy day to fund coronavirus measures. Lamont, though, has resisted withdrawing from the stabilization fund, saying its replenishment has resonated favorably on Wall Street.
"Look, we got $2.7 billion in a rainy day fund," Fasano told reporters at the Legislative Office Building. "We've got an emergency provision, a rainy day fund. We have a historic, first-time ever health emergency. Let's take $5 million out of that rainy day fund — that's not going to mean anything — and let's put it to the coronavirus.
"We don't need to bond for this. I would suspect that by doing this it would have an effect on the [bond rating]."
The $5 million would be for the first year. Connecticut operates on a biennial budget.
The State Bond Commission must approve any legislative authorization. As governor, Lamont chairs the 10-member commission and his budget office charts its agenda.
A year ago and shortly after the governor announced his debt diet, Lamont, Treasurer Shawn Wooden and budget Secretary Melissa McCaw met with investors in Hartford, Chicago, Boston and New York. The four made similar presentations to all four credit rating agencies before a GO sale that generated $828 million in retail orders and $5.5 billion overall.
Connecticut Treasury canceled its April 3 public finance outlook conference.
